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Rovio secures $42 million funding

Angry Birds Creator Rovio has secured $42 million in a surprise funding round, lead by Accel Partners.

Fortune.com senior editor Dan Primack tweeted a message announcing the funding shortly before entering an interview with an unnamed Rovio executive, sparking a wave of stories on business and gaming sites.

Since then, Rovio has confirmed the rumour, and also announced that it has named Skype co-founder Niklas Zennstroem to its board. Atomico Ventures, Zennstroem's investment company, co-lead the funding.

"This investment will give Rovio wings," Zennstroem said. "Angry Birds is one of the fastest-growing online products I've seen, growing even faster than Skype, and the company has done a brilliant job of extending it across different platforms and merchandise."

"Angry Birds will continue to grow and we aim to create more similar success stories," said Rovio CEO Mikael Hed.

Just yesterday Rovio revealed that Angry Birds had cost just $140,000 to make, but had generated $70 million from various revenue streams, including over $2 million from the sale of plush toys.

A film deal with Fox is also currently in the works, which funded the Angry Birds advertisement during the recent Super Bowl.

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22 Comments

I'm probably being nieve, but if the cost of developing and updating the game was $140k, and has generated $70M, why did they need to raise $42M. They can presumably afford to make hundreds of games slightly bigger than Angry Birds, unless they want to move into AAA space, (Super Angry Birds 3D?) which I'm guessing isn't the case. I know that of that $70M some probably went to other sources, including Chillingo, the Appstore, and the taxman, plus as profits paid to owners, but isn't one of the benifits of success like theirs that they can self fund?

Like I say, I'm not an expert on these things, I really would like to here what the benifits are.

The founders wanted to get rich, I guess. What's the best way to inflate the value of your company?

Take investment!

The investors are, after all, primarily interested in inflating the value of the company and make it look more attractive for multinational conglomerate acquisition, where they stand to make a killing.

This is business as usual.

Edited 1 times. Last edit by Erlend Grefsrud on 10th March 2011 2:48pm

Now don`t get me wrong I like angry birds, but it generated 70 million in revenue and now they need 42 million in funding? I don`t expect them to move to making big games for PC and consoles so what are doing with all that money?

I have been plugging away as a freelance writer looking for my 'break' its soul destroying and makes you question your ability and indeed if you have any business doing what you do. So what if they have a 1 in 25 hit rate? Good for them I say! With the likes of Blizzard going to the wall its great to see a success story. They got their break, all I need now is to get mine!

Like you said, with that money they could aim for a major AAA budget, but I can't see they have they infrastructure. At $140k we are taking what, 6-10 full time staff over 6-12 months? I haven't heard that they've been increasing their headcount to 100+ people, which I'm guessing would have been worth mentioning.

Edited 1 times. Last edit by Andrew Goodchild on 10th March 2011 4:45pm

I don't think they 'need' to raise $42M (as in: they need cash to pay the bills), but they had the opportunity to raise $$ at a good valuation, so probably made sense to take the money so they can grow faster.
I'm thinking about stuff like a war chest for acquisitions of other studios to scale faster + they want to become more than just a mobile game dev, in an interview with Wired the founders said they wanted to become the 'new Disney' - so I'm thinking logical next step is to become a real publisher -> a chunk of that will be for aggressively marketing new titles or spin-offs on a global level + they will need to staff up if they want to become a leading publisher: think VP of licensing, a top Legal dude, more marketing folk, a good Finance Director, ... + they are pushing Angry Birds on Facebook, so can imagine they would like to spend some $$ on that game + marketing as well.

From my understanding, the reason to accept investment when you don't need cash is to obtain partnerships. So now Rovio has Accel on their side with an invested interest in their growth. It's less about the money and more about the partnership.

@Erland. We are not assuming they are aiming for AAA, as I said I doubted that. We are questioning why they need to raise $42million on top of their tens of millions of profit when they arn't likely to go triple A.

How long can this go on until it's realized for the amazing fad it is? Yeah, yeah, great game, fun, smart developers and all (OK, it's basically Jenga with a slingshot, mad, mad birds and pigs)and for that, they get respect until the end of time. But yeesh, WHY the hell a feature film for Pete's sake???

Name ONE good game to film translation that didn't require forgetting the source material existed. In the case of AB, you're pretty much asking a LOT of a viewer unless you're expecting people with low expecations to show up because they LOOOOOOOOVE the game so much they'll spend 12 bucks on a ticket to see what they could play for less. AND it won't have half a dozen or more "writers" mucking things up to boot. Don't tell me there's going to be an IMAX 3D version or I'll have to contemplate buying a steamroller and plane ticket.

Yeah, I think the film will tank, as the game isn't about siting on your ass for two hours and watching stuff happen. Maybe Rovio will make Angry Birds: Spectator as a tie in app. You don't play the game at all - it's a rolling demo based entirely on the movie plot and locations - whee. Just ring up Uwe Boll and let him have at it - it'll then at least be a weirdly entertaining two hours (or 1:47 once edited down a bit). Of course, if I'm wrong, hell, I can laugh at /with it when it hits cable and I'm really bored.

Fox is in it for the loot and of course, it's helping line Rovio's pockets for as long as they can shift out new versions and updates to the 1 in 25 hit they've got. One one hand, MORE Angry will please those who can't get enough and don't mind buying the game across multiple platforms. On the other hand, what happens when the next big cheap (cheep?) thing comes out and there's a mass shift over to Sheep Boomers or Octopi Wizards and Rovio's only response is to throw a party, wave flags and throw confetti as they unveil... Angry Birds XIII: The Final Struggle!"

Cue the collective yawn of a casual crowd that's moved on to that next fad game. Personally, I'd like to see a new IP or hell, they could at least compile all 24 of those non-AB games and sell them on a disc at retail to those folks who haven't yet played ANY of their titles (or maybe have but think AB is the only game they ever made).

In the end, I'm not saying anything here other than enjoy the ride, guys... but put some of that loot away for when the bottom finally drops out.

@ Andrew: Really? What are staff paid? 6 staff for 6 months being paid 140k = 280 k for a year, which is $46,700 per person per year, including all benefits...if it is 10 staff, then even less per person, $28 k per year incl. benefits. That assumes all the cost went to salaries - presumably there was some infrastructure cost as well - rent/lease, electricity, computers, etc. I dunno, doesn't seem too exorbitant. And make one of those a manager at 75k, everything else shifts down even more...

@Leven I'm confused, I didn't suggest it was exorbitant, it was my rough estimate about how far their money would have gone (possibly low side) and was meant to emphasise the scale up they would need to make use of that investment, going from 6ish people to 100 people+ with noone reporting on a massive recruitment drive